DISCOVER CAPITAL HOLDINGS, DINOV BROTHERS TO PAY $706,000 IN
STOCK FRAUD CASE; DINOVS BARRED FROM INDUSTRY
On November 19, 2004, the Honorable Judge Rosemary M. Collyer of
the United States District Court for the District of Columbia
entered final judgments against Discover Capital Holdings Corp.,
Indianapolis Securities, Inc., and Eli and Ari Dinov, arising from
charges that they participated in the fraudulent, unregistered
offering of Discover Capital's preferred shares. Without admitting
or denying the allegations of the Commission's complaint, Discover
Capital and the Dinov brothers agreed to pay a total of $706,459 in
disgorgement, penalties, and prejudgment interest, including a
$120,000 penalty imposed on Ari Dinov. In addition, the four
defendants consented to being permanently enjoined from violating
the antifraud and registration provisions of the federal securities
laws, and Eli and Ari Dinov consented to being barred from acting as
officers or directors of a public company. In related proceedings,
the Commission issued an administrative order on December 1, 2004,
to which Eli and Ari Dinov consented, barring them from associating
with any broker or dealer.
Specifically, Discover Capital, Indianapolis Securities and the
Dinovs consented to the entry of final judgments permanently
enjoining them from violating Sections 5 and 17(a) of the Securities
Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder.
The Commission's complaint, filed on July 9, 2003, alleges that
the defendants, Eli Dinov, his brother Ari Dinov, and David Rubin
used spam e-mail touts and misleading, high pressure sales calls to
raise $1.1 million dollars through the sale of private placement
shares of Uniondale, New York-based Discover Capital, a company
controlled by the individual defendants, through Discover's wholly
owned broker-dealer subsidiary, Indianapolis Securities.
The money to be paid in connection with these final judgments,
together with the $462,000 in disgorgement, penalty, and
pre-judgment interest which co-defendant David Rubin was ordered to
pay in March 2004, brings the total amount to be paid by the
defendants in this case to over $1.1 million.
For additional information, see Litigation Releases
18222,
18231,
18265,
18639.
http://www.sec.gov/litigation/litreleases/lr18988.htm
